Economy needs the Capital Market to Grow-Sanusi

Mallam Sanusi Lamido Sanusi, governor of Central Bank of Nigeria (CBN) has stated that the nation’s economy will not recover fully until the capital market is given its place as a long-term security provider.

The governor who stated this during a courtesy visit to his Lagos office by members of the Charted Institute of Stockbrokers (CIS) said that “without a very strong and deep capital market the economy will continue to depend on banks for investment funds”.

He noted that banks do not have what it takes to provide the kind of long-term loans required to grow the economy.

For this reason, he said, the capital market becomes handy in the provision of the needed funds for growing the economy.

The governor gave the assurance that the Nigerian capital market will bounce back next year.

According to him, every downturn of the capital market takes an average of three years to recover.

“I have always said that the market will recover in 2013”, but the question according to him is, have we learnt our lessons? “We need to look at the concentration of the market. A situation where the banking sector remains the dominant player in terms of capitalisation is not ideal”, he said.

The Governor advised members of the CIS to use the occasion of their forthcoming national workshop as an avenue to discuss issues that will stabilise national growth and to facilitate the further deepening of the Nigerian capital market.

Speaking on the much talked about forbearance for capital market operators who obtained margin loans from banks and are currently not able to pay back, the CBN governor said, “Our position at the CBN is that everybody who have lost money through margin loans and trading have to bear their losses”.

“We are of the opinion that capital market operators, the banks and AMCON should all take a portion of the losses so that the market can move forward”, the governor said.

He asked the CIS to put its house in order, stressing that some members of the association are frustrating efforts to enforce forbearance package for defaulting brokers.

He stated that a situation where a few persons who were able to successfully repay the margin they obtain from banks go about campaigning that their peers must be compelled to meet their obligations does not augur well for the implementation of the policy.

Earlier in his address, Mr. Ariyo Olushekun, president and chairman of the governing council of CIS,  appreciated the CBN governor for his effort to stabilise and grow the Nigerian economy.

“Let me start by acknowledging your untiring efforts as CBN Governor to ensure economic stability and growth in Nigeria. The transformation of the Nigerian banking industry and the establishment of a monetary regime that has engendered relative stability in the macro economy are eloquent testimonies”, Ariyo noted.

“We the capital market operators appreciate your enlightened contributions to the discourse on capital market recovery consequent upon the crisis which commenced a few years ago. Your support to the call for grant of forbearance to capital market operators as a way of resolving debt overhang in the market is also worthy of note. We sincerely appreciate your focussed, courageous and determined leadership, and wish you continued success in your endeavours”, said Ariyo.

A team comprising the executives, exco members and heads of various committees of the CIS paid a courtesy visit to the CBN boss to intimate him of the first annual national workshop of the CIS.

The workshop is scheduled to hold at the Transcorp Hilton Hotel Abuja on December 11, 2012, with the theme, “Working the Transformation Agenda-The real issues. According to the association the focus of the workshop will be on Agricultural, Telecommunications and Power sectors of the Nigerian economy.